London — Oil prices fell on Monday as widespread lockdowns in China and weak economic data in the country fuelled fears of a global recession, though the market found some support as the EU stepped closer to an import ban on Russian crude.
Brent crude was down 28c, or 0.3%, at $111.27 a barrel at 9.34am GMT, and US West Texas Intermediate (WTI) crude slipped 9c , or 0.1%, to $110.40 a barrel.
The fall of oil prices “is chiefly due to the weak Chinese economic data, as the lockdown measures are having a direct impact on the world’s second-largest market,” said Barbara Lambrecht, energy analyst at Commerzbank.
It is estimated that 46 cities in China are under lockdowns, hitting shopping, factory output and energy usage.
Latest Chinese data showed retail sales in April shrank almost 11% from a year earlier, while factory production fell 2.9% year-on-year.
In line with the unexpected industrial output decline, China processed 11% less crude oil in April, with daily throughput the lowest since March 2020.
However, oil prices found some support as the EU’s diplomats and officials expressed optimism about reaching a deal on a phased embargo of Russian oil despite concerns about supply in Eastern Europe.
Austria expects the EU to agree on the sanctions in the coming days, foreign minister Alexander Schallenberg said on Monday.
German foreign minister Annalena Baerbock said the bloc would need a few more days to find agreement.
“With a planned ban by the EU on Russian oil and slow increase in Opec output, oil prices are expected to stay close to the current levels near $110 a barrel,” said Naohiro Niimura, a partner at Market Risk Advisory.
Meanwhile, US gasoline futures set an all-time high again on Monday as falling stockpiles fuelled supply concerns.
“Oil prices will remain bullish, especially WTI’s near-term contract, as US gasoline prices continued to rise amid weaker imports of petroleum products from Europe,” said Kazuhiko Saito, chief analyst at Fujitomi Securities.